Insurance big challenge for Louisiana

By James Ronald Skains
Journal Correspondent

"I include myself in those persons for whom insurance is a big challenge," Commissioner of Insurance Jim Donelon told the Piney Woods Journal. Donelon continued, "It is the biggest career challenge that I have ever faced.

"Perhaps it is the ever-changing landscape of the insurance business that is so much of a challenge and is rewarding to me. I'm only the regulator of the insurance business in Louisiana.

The State Legislature sets the rules and regulations that insurance companies must follow. There is no doubt that Insurance companies operating in Louisiana have some of the best lobbyists that can be hired to look after their best interest." "I'm well aware of the importance of the forest industry," Commissoner Donelon pointed out.

"Last year I think the value was almost $3 billion to Louisiana and represents the largest sector of the Agriculture industry." "At the last meeting of the Louisiana Property & Casualty, the Director of the Workers Comp, Sherai Kellar, talked about the high incidence of logging accidents. She said these accidents were what was driving up the cost of liability and workers comp premiums for loggers."

According to the National Census of Fatal Occupation Injuries for 2015 by the Bureau of Statistics , logging is one of the most dangrous professions, with some 132 deaths per 100,000 full-time workers.

"However I do want to say that Workers Compensation is one of the success stories of the industry, and has been for a few years. Increased competition in the Louisiana worker's compensations market means that companies today are paying 34% less for the same coverage as they were 10 years ago; and 50% less than they were 20 years ago." "In 2007, there were 197 companies writing workers comp policies in Louisiana," Commissioner Donelon explained. "By the end of 2016, we had 245 companies writing workers' comp policies; an increase of 25%."

"In Louisiana, over the last five years, commercial auto liability premiums have increased over $120 million, from $429 million to $550 million. However, according to the information we have, it is estimated that underwriting cost have increased as well to $114 million in those five years. That puts the insurance industry segment at a loss of $204 million in 2016, excluding their investment income."

"I do want to say that commerical trucking for the agriculture industry, particularily logging, has severe challenges with insurance companies nationally with some companies exiting certain markets.

Another factor is that increasing claim severity has driven loss costs not only in the logging industry, but across the board."

"Experts on this subject point to increased number of vehicles on the roads, distracted driving, aging infrastructure, and the rising cost of vehicle repairs as causes for increased losses in the insurance industry. Injuries sustained in vehicle crashes have also increased the average claim duration with more days lost from work than from workers' comp claims."

"Personally, I think that telematics, computers and other like devices may offer an opportunity to bring down commercial insurance rates to a more manageable place than where they are now," Commissioner Donelon elaborated. "A commerical fleet insurer may be able to offer enhanced risk management services to fleet operators who place telematic devices on their vehicles."

"On personal line auto insurance, claim severity has been climbing steadily over the last decade. Although cars have improved technology, this all comes with a cost. It takes specialized training for technicians to repair the improved cost which drives up the claim cost. And to make matters worse, traffic deaths were up 5.6% over 2016. Traffic deaths in 2016 were up over the 2015 numbers. 2015 was the year when fatalities spiked with a jump of 8.4% which was the largest increase since the mid-1960's."

"Most vehicular deaths are linked to risky behaviors such as drunk driving, speeding, not wearing seat belts, and distracted driving such as texting, and computers," Commissioner Donelon acknowledged. "Another factor is that 40% of Louisiana drivers only carry the bare minimum insurance coverage on their vehicles. Believe it or not, we believe that 13% of Louisiana drivers have no insurance coverage at all." "There are so many factors that affect the cost of vehicle insurance including the number of miles driven. The more miles driven can increase the number of accidents and vehicular fatalities. Another factor here in Louisiana is that technically, people with full coverage insurance or higher coverage than required by law are paying to cover the cost of someone who does not have enough coverage."